The basic aim of Mr Klein?s visit

We are concerned that press reports of comments made by World Bank Vice President Michael Klein during his recent visit to Mauritius may have created an inaccurate view of the Bank?s attitudes toward pending reforms now being considered by the Government of Mauritius to revitalize the country?s economy and build a strong foundation for the future for all Mauritians.

The visit of Michael Klein to Mauritius, his constructive meeting with the Prime Minister, and his remarks to a broad cross section of society are all testimony to the high regard the World Bank holds for the reforms being developed by the Government. The World Bank is prepared to help in any possible way to assist the Government in implementing its reform agenda, and this was the basic message that Mr Klein emphasized in his private and public remarks.

In response to a very specific question by your reporter about eligibility for the Bank?s concessional lending program, IDA, Mr Klein quite appropriately indicated that the strength and relative prosperity of the Mauritius economy made it ineligible for this particular program. This is the case as well for a number of other middle income countries with which Mauritius wishes to compare itself. IDA resources are targeted for the poorest countries in the world, ones largely without access to other forms of credit.

This having been said, Mr Klein also urged Mauritius to be ?creative? in seeking other means to reduce the cost of funds for development activities ? including the use of grants to ?buy down? the cost of loans. This includes Aid for Trade initiatives as well as bilateral assistance. The World Bank is in fact already working with the Government to achieve such a creative solution in support of its economic program. Because Mauritius is an Upper Middle Income country, there are no ready-made instruments to achieve this blend of grants and market-rate borrowing, so even the best collective efforts of Mauritius and its external development partners may not be as fruitful as we might wish.

However, the World Bank is working closely with the Government and other external partners to find creative solutions. This process should be enhanced as the Government receives the necessary domestic support to implement its four-pillar programme of fiscal consolidation while moving rapidly to a duty free island, improving investment climate, restructuring sectors affected by trade shocks and proactive efforts to attract foreign investment.

Mauritians should be very proud of the economic progress that the country has achieved, and the Government is to be commended for its leadership and bold proposals that recognize the current challenges as opportunities to revitalize the economy for the future. The World Bank looks forward to working in partnership with the people of Mauritius and its external partners to support programmes that benefit all Mauritians.

John DONALDSON Communications Adviser Africa Region World Bank